Comments by ECB governing council member, Jens Weidmann
- Recovery from the coronavirus crisis will be “painfully slow”
- The level of economic uncertainty is “exceptionally high”
- PEPP should be flexible but not unbound
- Capital key could be a useful benchmark
- Shouldn’t assume that ECB will keep yields low forever
- German economy probably bottomed out in April
- Germany has fiscal space for more measures if needed
Well, if it is guided by their inflation goal and with the recovery set to be “painfully slow”, their definition of temporary may be until 2022 at the very least – especially if they plan to use the capital key as a benchmark for the stimulus programme.
I’m pretty sure they had the same thought with the negative rates experiment (as in for it to be temporary) but look where we are now. PEPP is definitely a different beast but don’t expect the central bank to so easily get rid of it in the year ahead.